Market Pulse: iPhone 5: Good for Apple, great for ATandamp;T and Verizon

Related Media

INCLINE VILLAGE, Nev. — Apple’s new iPhone 5 was released to much hype. Amazingly, more than five million phones were sold in the first three days. Apple’s success is well documented and it is well on its way to becoming the first company to be valued at $1 trillion.Still, there are safer ways to take part in Apple’s success. ATandamp;T (T) and Verizon (VZ) come to mind. Consider that nearly every iPhone and iPad user pays ATandamp;T or Verizon a monthly fee. Whereas Apple needs to constantly stay ahead of the competition and release new and exciting products, ATandamp;T and Verizon simply have to provide the connection, month after month, year after year.Of the two, ATandamp;T is the biggest beneficiary. They accounted for 68 percent of the iPhone 5 pre-orders while Verizon is believed to account for 24 percent. Sprint accounted for just 8 percent of the orders.ATandamp;T’s market cap is nearly double Verizon’s and its debt-to-equity ratio is lower. Both have very attractive yields, which is why we recommended them in our Oct. 19, 2011 article titled Investing in Dividend Paying Stocks. Since then, ATandamp;T is up 31 percent and Verizon is ahead 23 percent ... and the dividends keep coming. Their yields remain attractive. Even after the price appreciation, ATandamp;T yields 4.6 percent and Verizon yields 4.5 percent. These yields are considerably higher than most utility stocks and they have increased their dividends every year.With interest rates at record lows and the Fed saying they will stay low for years to come, high-yielding, revenue-rich stocks like ATandamp;T and Verizon are increasingly attractive. They are the dominant players in the industry, now and for years.That’s why we hold them in client accounts.— David Vomund is an Incline Village-based fee-only money manager. Information is found at www.ETFportfolios.net or by calling 775-832-8555. Clients hold the positions mentioned in this article. Past performance does not guarantee future results. Consult your financial advisor before purchasing any security.